Perth-based TMK Energy has reached another milestone at its Gurvantes XXXV coal-seam gas project in Mongolia’s South Gobi Basin, with all three of its pilot wells entering production testing.

After successfully discovering thick gassy coal intervals of up to 68m with its Lucky Fox 1, 2 and 3 wells, the company earlier this month installed three sets of downhole pumps and driveheads, in addition to surface gas-handling facilities, in preparation for flowing hydrocarbons to surface as part of its production tests.

TMK has confirmed its downhole pumps have now been turned on at low rates and are producing water from all three wells, in line with engineering expectations. It confirms coal-seam permeability and the successful installation of all downhole and surface infrastructure.

Water is a rare asset in the arid Gobi Basin and it will not go to waste in this instance as TMK has agreed to provide nearby coal miner Mongol Alt LLC (MAK), which also owns the Gurvantes lease, with early-stage water from the tests to feed its nearby power and water-hungry coal mining operations.

To produce gas, TMK plans to gradually increase downhole pump rates in the coming weeks to de-pressurise the gas-bearing coal reservoir to a point where gas “desorbs” from the coals, enters the wellbore and flows to surface in a phenomenon known as “gas breakthrough”.

Management says modelling suggests its gas breakthrough could occur at any moment, following initial reservoir de-pressurisation.

Since acquiring the Gurvantes XXXV Coal Seam Gas Project less than 18 months ago, TMK has drilled seven CSG exploration wells, discovered a significant gas resource, drilled and completed three pilot production wells, built and commissioned production facilities and has now commenced production testing from the pilot well program. First gas production from the extended production test will propel the Project out of the exploration phase and firmly into the appraisal and development phase for the Nariin Sukhait area. The 2023 exploration program aims to further demonstrate the true scale of the Project and we look forward to commencing this aspect of the work program over the coming months.

TMK Energy chief executive officer Brendan Stats

As production testing progresses, the company expects to measure sustained gas flow from the wells. The data will feed into TMK’s prefeasibility study for the Gurvantes project, which has an estimated (2C) contingent resource of 1.2 trillion cubic feet of high-methane gas.

Following initial gas flaring at site, steady flow from the pilot wells will feed an energy offtake agreement, signed in March this year between TMK and MAK. The deal will see produced gas used for modular power generation at site, which will then be sold to MAK at the prevailing local energy wholesale price, providing TMK with a clear pathway to early commercialisation.

Gurvantes is operated by TMK as part of joint venture with Perth-based partner, Talon Energy, and signals the company’s commitment to long-term gas production in Mongolia, where it has an exploration licence for 15 years in an area widely regarded as one of the most prospective coal-seam gas basins in the world.

In addition to the local Mongolian need for gas, other market opportunities for TMK includes China’s significant natural gas market, currently serviced by importing via long-distance pipelines from central Asia, Russia and Myanmar.

China also imports gas by sea, buying 63.4 million tonnes of tanker-shipped liquefied natural gas (LNG) last year, with total LNG imports meeting only 41 per cent of its demand.

The Chinese border is tantalisingly close, less than 20km south of the Gurvantes project. China’s huge west-east gas pipeline sits another 280km across the border.

With production testing kicking off at Gurvantes, TMK has continued its rapid development of the project after acquiring it less than 18 months ago. The company will continue to hunt this year for prospective resources along strike of Gurvantes where outcropping coals suggest more gas potential.

A 2D seismic survey is planned, with up to eight more exploration wells also in the company’s pipeline.